The Canadian dollar is slightly lower in the Tuesday session. Currently, the pair is trading at 1.3220, up 0.24% on the day. On the release front, Canada releases corporate profits. It’s a busy day in the United States. We’ll get a look at construction and manufacturing data, as well as CB Consumer Confidence. All eyes will be on Fed Chair Jerome Powell, who will testify before the Senate Banking Committee. On Wednesday, Powell speaks before the House Financial Services Committee.
The Federal Reserve will be on center stage this week, as Fed Chair Jerome Powell testifies before congressional committees on Tuesday and Wednesday. The Fed has been decidedly dovish early in 2019, in sharp contrast to 2018, when the Fed raised rates four times in order to keep the red-hot U.S. economy from overheating. However, the global trade war has taken a bite out of global growth, and the U.S. economy is unlikely to repeat last year’s performance. The markets will be listening closely for hints regarding future interest rate policy and whether the Fed plans to remain dovish in stance.
Canadian numbers have been mixed, making it difficult for the Bank of Canada to step in and raise rates for the first time in 2019. Similar to the Federal Reserve, the BoC was aggressive in 2018, but has applied the brakes in 2019. The Bank hiked rates three times last year, but has since stayed on the sidelines, with the benchmark rate pegged at 1.75%. It’s unlikely that the bank will make any rate moves unless the Canadian economy shows clear signs of gathering steam. Consumer spending data in December was a disappointment, with retail sales and core retail sales posting declines.
